If Politicians Pushing SOPA/PIPA Want To Create Jobs, They Should Support The Internet -- And Stop Treating Copyright Companies As Special

from the evidence-based-policy-making dept

A key element of the political rhetoric around SOPA/PIPA was the idea that it was about jobs, and that jobs are so critical in the current economic climate that safeguarding them overrides any other concern the Net world might have about the means being proposed to do that. But then the key question becomes: who are really more important in terms of those jobs - the copyright industries, or companies exploiting the potential of the Internet that would be harmed if the Net were hobbled by new legislation?

The Internet is a critical element of growth. Both our macroeconomic approach and our statistical approach show that, in the mature countries we studied, the Internet accounted for 10 percent of GDP growth over the past 15 years. And its influence is expanding. Over the past five years, the Internet’s contribution to GDP growth in these countries doubled to 21 percent.

The latest information (pdf) from the International Intellectual Property Alliance (IIPA) claims the GDP contribution from the "core copyright industries" in the US in the years 2007-2010 went from 6.43% to 6.36% - that is, its contribution to the overall GDP was largely unchanged over this period. So the contribution of the "core copyright industries" to GDP growth over this period was also around 6%. The "core copyright industries" are defined as follows:

The core industries are those industries whose primary purpose is to create, produce, distribute or exhibit copyright materials. These industries include newspapers and periodicals, motion pictures, recorded music, radio and television broadcasting, and computer software.

That is, they include software companies, some of which are doubtless active on the Internet. So the contribution of the non-Internet core copyright industries to the GDP growth from 2007-2010 was less than the 6% figure above. That compares with an overall contribution of the Internet to GDP growth in the mature countries as a whole of 21% (but over five years, not four).

So what about the jobs? Here's McKinsey again:

The Internet is a powerful catalyst for job creation. Some jobs have been destroyed by the emergence of the Internet. However, a detailed analysis of the French economy showed that while the Internet has destroyed 500,000 jobs over the past 15 years, it has created 1.2 million others, a net addition of 700,000 jobs or 2.4 jobs created for every job destroyed. This conclusion is supported by McKinsey’s global SME survey, which found 2.6 jobs were created for every one destroyed.

Again, the IIPA report offers some figures:

the core copyright industries employed 5,496,100 workers in 2007. These workers represented 3.99% of the total U.S. workforce in 2007. By 2010, the number of core copyright employees in the United States had declined by 398,500 workers to 5,097,600.

In an earlier report (pdf), the number of people employed by the core copyright industries in 2002 is given as 5.48 million – roughly the same as in 2007. That is, whether or not the numbers are really representative, there was a net decline in the workforce of the "core copyright industries", which include software and probably some Internet companies, from 2002 to 2010.

By contrast, in France, whose population is roughly a fifth of that of the US, the Internet created some 700,000 jobs net. That was from 1995, but in the early years it is likely that relatively few jobs were created by the then-new Internet, so most of those 700,000 would have been created later on - say 400,000 for the last eight years. In the US, we might expect at least a pro rata number – 2.4 million jobs. That's probably an underestimate, since the US is in the Net vanguard, but even if it's an overestimate, the figure is likely to be much better than the net loss of the core copyright industries.

If the backers of SOPA and PIPA were really as concerned about jobs as they profess to be, they would be doing everything in their power to defend the Internet so as to preserve this incredible engine of growth, not attack it. And they would be pushing the copyright industries to embrace the Internet as rapidly and completely as possible, since the McKinsey report also points out:

Although the Internet has resulted in significant value shifts between sectors in the global economy, our research demonstrates that all industries have benefited from the Web. Indeed, in McKinsey’s global SME survey, we found that 75 percent of the economic impact of the Internet arises from traditional companies that don’t define themselves as pure Internet players. The businesses that have seen the greatest value creation have benefits from innovation leading to higher productivity triggered by the Internet.

Sounds like a perfect solution: instead of fighting the digital revolution tooth and nail, the copyright industries could embrace it like everyone else, stop demanding to be treated like a special case, and start innovating.

Really?

Are we back to the bugger whip maker arguments again? Innovation always will be the driving force behind job growth. Period. Deal with it, stop fighting it, and move the hell on to something more constructive like integrating your business with it.

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From previous article

" Historically, before pharmaceutical patents were introduced in Italy in 1978, that country accounted for about 8% of new pharmaceutical discoveries worldwide. After the industry was strangled by patents, that percentage dropped to practically zero. Switzerland, a powerhouse in the world drug industry, introduced pharmaceutical patents at about the same time. While Switzerland's fall has not been as dramatic as Italy's, it too is much less of a powerhouse today than it was before 1977. "

Glyn, once again you are trying to create an excuse for why piracy should be tolerated and permitted, and once again, you fail miserably.

The internet creates jobs with or without a SOPA law. Do you really think that The Pirate Bay is a great source of employment in the US? Do you think that keeping Megaupload online was doing some great favor for the unemployment rates in Nebraska? The answer is no.

Most of the business models of piracy and content grifting are low manpower, high automation situations, often relying on the stupidity of end users to do the work for them. When you look at all of the video going on Youtube, example, what do you think the ratio of hours of video to jobs are at that company?

Jobs for the most part are a local concept. A large number of jobs are spinoffs of other jobs. Office for something opens, hires 300 people. Those 300 people each buy a car every 3 years (100 cars a year), which are sold and maintained by a local dealership, which hires sales staff, mechanics, etc. The local car wash, gas station, the auto parts store, the guy who sells tires... they all get part of it in the end. The guy who works at the gas station rents an apartment, buy furniture from the local furniture store, gets his food at the local super market... and so on.

30 people working in a data center just doesn't change the economy of my town. It barely ticks over the economy of anywhere. Remember, most of the computer parts used in the servers aren't made in the US, it's all just part of that deal that ships the work overseas.

Why do you think that the standards of living in China, Thailand, and India have been increasing while the US enjoys high unemployment, foreclosures, and plant closings?

In the end, you cannot justify piracy or content grifting because it creates jobs, because whatever it creates just isn't enough to make up for all that is lost.

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Let me add this:

Itunes employs very few people, considering the size of it's work. this quote from 2007 is a great example:

"Hargreaves calculated the network fees at $0.05 per song, which includes the delivery fee, and the hardware and software to facilitate delivery. "Operating expenses are likely less than $0.05 per song, based on the relatively small number of employees we believe work on iTunes," he wrote."

That replaced pretty much all of the retail record stores, replaced all the people who worked in them, the companies that built and maintained the buildings, the truck drivers, the shippers, and so on.

The "direct" jobs numbers are often incredibly misleading because they ignore the shifts that happen. Yes, the new economy is more "effecient", but it is also often more distant, removing the need for local staffing at all. It is effectively a weird sort of outsourcing of life.

Remember too, those jobs that are created are often created in the lowest wage parts of the country or the world, depending on how things go. Why have a data center in the middle of New York City when you can build it in the middle of Omaha and hire a bunch of locals for $7 an hour to keep it shiny?

In the end, the current US recession is in part a result of the internet and communication gutting out much of the economy. We kept pushing for cheaper, better, lower cost, lower interest rates, trying to live the lives of the almost rich and famous, and it all in end bit us in the ass.

Don't praise the internet too hard, because the net results are painfully obvious.

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Again, jobs are not an end, aggregate output is. If more things can be produced for cheaper then they ought to be. Econ 101. We have the potential to produce more stuff now than before, it's just being poorly distributed and much of what can be consumed at lower prices isn't due to artificial monopolies. If the government-industrial complex weren't so afraid of people getting stuff for free, or for decent prices, then more people would be able to afford more because they would have more purchasing power.

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I found an interesting quote on Slashdot I want to copy here.

artor3 writes

"A more accurate statement is "manufacturing jobs are all but dead". The US's real manufacturing output (in inflation adjusted dollars) has doubled over the past thirty years, and aside from a temporary dip during the recession has been steadily rising. But the number of people employed in manufacturing has fallen by ~30% over the same period... and that's without accounting for the population increase!

The problem with the "decline" of manufacturing is that American workers are crazy productive. We can produce all that we need with far less than full employment. This should be a good thing, but because of our idiotic love affair with the failed "trickle down" theory of economics, we end up punishing millions of people, not because they're unwilling to work, but because we simply don't need them to.

If we could get over our fear that someone might get something for nothing, we could simply start giving everyone enough money to get by, with jobs being something people do to get ahead, not to survive. If we don't do it soon, increasing automation will force the issue within a few decades."

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So you are in the same boat as Obama and his war on the job stealing ATM machines? If the work you do can be satisfactorily automated or done by others for free (or much cheaper) in their spare time then maybe your job should be eliminated and put your "talents" to good use elsewhere.

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Once again you completely ignore all the jobs that services like Megaupload enable. All those artists that were using that service to make money off their own work and making money, buying cars, and housing etc. Do their jobs not matter in your world view? Why do you hate artists making money?

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I don't ignore what megaupload enables... I just feel that it enables very little compared to what it takes away.

Artists generally didn't make money on megaupload.

Can you please point me an artist who was making a living off of having their work pirated? Then can you put it against all of the people who have lost their jobs because pirated material made it impossible for their companies to keep them employed (such as retail stores)?

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Can you please point me an artist who was making a living off of having their work pirated?

Click on the tab at the top of this page that says "Case Studies"

Then can you put it against all of the people who have lost their jobs because pirated material made it impossible for their companies to keep them employed (such as retail stores)?

Once again, proof that piracy is the cause of such unemployment would be required. And it would need to separated completely from other causes, like the move to online purchasing which has caused decreases in brick & mortar stores.

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A great example is record stores. Clearly, online piracy has had a much more harmful effect on the music industry's subsidiary jobs than anywhere else. Long before there was Itunes, there was Napster, and napster and the pirate mentality did more to hurt music sales than anything that has come since.

The move to MP3s did the damage. Itunes and other methods are just a response to try to stem the tide. Meanwhile, good luck actually finding a music retailer anymore in your city (outside of the small music stock in Bestbuy... and oh yeah, Bestbuy is shrinking their stores and getting rid of that too... all because there is no money left in it).

Online purchases are not even a drop in the bucket in music compared to what was sold before the Napster revolution. Clearly, piracy cost a lot of people their jobs.

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Online purchases are not even a drop in the bucket in music compared to what was sold before the Napster revolution. Clearly, piracy cost a lot of people their jobs.

No, not clear at all. Pre-Nabster was about selling CD's (ie: having to purchase 9 crappy songs to get 1 good one). Post-Nabster is about selling individual tracks. Pre-Nabster was also about reselling old music in new formats - LP, 8-Track, Cassette then CD. I no longer need to repurchase my catalog because I can now rip my CD for use in my MP3 player. Sure, the shiny plastic disk selling business is down, but the music industry as a whole is growing.

Earlier, you implied that the net gain was important, but here you are not looking at all the jobs created from ISP's to Online Storefronts to hardware manufacturers. Sure, there has been disruption, but overall I don't think the job losses are as great as you make them out to be.

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I think he failed miserably because the failure is clear. He failed to raise the argument to the level of passing. Further, the failure is complete and total because it's an attempt to create a justification for illegal activity and to support the business models of those who seek to profit from that activity. I will attempt in the future to try to use other words to keep you entertained, epicly seems nice.

"hey guys real gain isn't enough to make up for unreal loss, completely fucking floored right now thank you for that revelation"

...and a fine "fuck you" too.

The issue is that the studies that are used look at DIRECT jobs, and not indirect jobs. As an example, if you sell the same amount of music digitally as you did on CDs, in theory you are net equal. However, it's not really true, because the digital distribution part (automated, done by a machine, few if any humans required) replaces all sorts of people: people running the machines that print the CDs, that make the plastic cases, that design the cover art, that print it, that assemble it, that put it in box... and those guys who load the boxes on the trucks, the truck drivers, the guys at the stores that receive the stock and put it on the shelves, the clerks working at the stores, etc. The studies leave those people out because they are not DIRECT employees.

Distribution tends to be labor intensive. Remove distribution, and you remove labor, like it or not.

So you added 10 guys to program the site and maintain the entries. Great! But you cut off hundreds of people on the other side that worked on the distribution side.

I know, it's the effects of technology. All I am saying is that it is incredibly misleading to not consider all of the jobs touched in the product cycle, and all that is lost as a result.

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Circular reasoning, stuck in infinite loop, does not compute, does not compute! Abort, fail, retry.

"He failed to raise the argument to the level of passing."

You failed to raise your (non)argument to a level of even being an argument.

"Further, the failure is complete and total because it's an attempt to create a justification for illegal activity"

Just because it's illegal doesn't mean it's wrong and needs to be justified. On the contrary, every law needs to be justified and if a law is not justified, like 95+ year copy protection lengths (or even copy protection in general) then that law ought not exist.

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Sooooo when it's jobs the technology cuts requirements (jobs) wildly, but when it comes to content company profits it's perfectly reasonable for them to demand the same price for the digital product as for the physical? Double standard much?

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Sooooo when it's jobs the technology cuts requirements (jobs) wildly, but when it comes to content company profits it's perfectly reasonable for them to demand the same price for the digital product as for the physical? Double standard much?

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"Do you really think that The Pirate Bay is a great source of employment in the US?"

If we didn't have laws making it so legally expensive for us to host these sorts of technologies in the U.S., it could create more jobs. But, no, we have laws that make it too legally risky and expensive for restaurants and other venues to host independent performers, which hurts content creators and it hurts jobs. We have laws that make it too legally risky and expensive for bakeries to allow children to draw pictures on their birthday cakes because it's such a horrible thing to allow. Our laws hurt jobs. If it were up to the IP cartels, like Universal, Youtube wouldn't be able to exist, which would hurt jobs. Veoh had to shut down for no good reason because our broken legal system required them to pay for expensive lawsuits for no good reason, which hurts startups and it hurts jobs. It helps the jobs of lawyers that contribute nothing to aggregate output, you know, the thing that jobs should be designed to create. We have states that artificially limit the number of taxi cab drivers that can drive taxi cabs, which hurts jobs. This hurts jobs.

"Why do you think that the standards of living in China, Thailand, and India have been increasing while the US enjoys high unemployment, foreclosures, and plant closings?"

Maybe it's partly because they are embracing better business models while the U.S. is too busy fighting bogus IP lawsuits.

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Well said.

99.9% of the Internet is made up by the content generators, the people who post on their blogs, upload images to Flickr and things like that. Yet who gets the cash? The top 0.1% and a bit floats down to the rest of us who actually drive the thing.

Now I don't mind in many cases. I'm happy to let Facebook or Tumblr keep 100% of the ad revenue if it keeps the lights on. But I would like a chance to control my own content without Big Search or Big Piracy taking a huge slice of whatever revenues I generate.

If I fail, so be it, but I would like to control my own content and not some Big Search engine that won't even tell me how it computes the ad revenue.

We are the 99%. We do the work on the Internet. Copyright protects us. Is it a surprise that the top 1% hate copyright?

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Yeah! Copyright is great! Just wait until 99%ers try to fight a copyright suit in court against a 1%er. The 99%ers don't have the means to fight it out in court, pay the legal costs, nor manipulate the laws. Copyright law is one way, baby! For the 1%!

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But I would like a chance to control my own content without Big Search or Big Piracy taking a huge slice of whatever revenues I generate.

Care to explain how what you call "Big Search" is taking "your" revenues?

Also, you seem to forget that this a symbiotic relationship here. If you are selling something via the internet you have the choice not to be indexed by search engines (via robots.txt on your site). But, good luck with that, since no one will know you exist and you won't sell much of anything.

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"But I would like a chance to control my own content without Big Search or Big Piracy taking a huge slice of whatever revenues I generate. "

and I would like a million dollars from the government too.

and our laws are not about allowing people to control their own content, they're about making sure that the only way content can get distributed is by having content creators sign over their copy protection privileges over to parasite middlemen. That's why, outside the Internet, the legal system is intentionally designed to make it difficult for people to distribute their own content thanks to government etsablished broadcasting and cableco monopolies and thanks to laws that make it too legally expensive and risky for many restaurants and other venues to host independent performers and too legally risky and expensive for bakeries to allow children to draw their own drawings on birthdy cakes. These laws aren't about the content creators, I find it offensive to content creators that IP extremists (and you are probably a lawyer and not a content creator) try to use them as the poster child for their self serving interests.

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Do you think that keeping Megaupload online was doing some great favor for the unemployment rates in Nebraska?

Actually, I would argue yes to that. Megaupload was, at it's heart, a file locker. A simple tool, used by lots of small businesses to share business files across large distances. If these small business have to create to their own individual solutions to remain productive, that is money that cannot be used to hire new employees or expand the business.

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Everything I saw about Mega was 99% piracy.

Perhaps you need to broaden your sources.

It's not how the EFF and the company hosting MegaUpload (Carpathia Hosting) feel about it:

"Megaupload's innocent users are entitled to access their property," said EFF Legal Director Cindy Cohn. "We hope that everyone involved can work together to comply with the law and ensure basic fairness to the millions of people who have done nothing wrong."

This week, Carpathia Hosting and EFF announced that Carpathia created a website at www.megaretrieval.com so that Megaupload’s lawful customers could contact EFF and provide information about the scope of the issue and the material made unavailable by the seizure.Source

I guess we will have to see how many responses they get before we can judge how much of Mega was infringement or not.

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Sharing files could be accomplished in many other ways that doesn't require using a piracy service, so attributing those jobs to mega is misleading.

You also are forgetting about the chilling effects the Mega seizure created. Lots of other perfectly legal file locker services are limiting or disabling use for US users because they fear similar actions from the USG. That ripple is directly affecting small businesses who depend on these services.

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Re: Just stop it. Please.

"Glyn, once again you are trying to create an excuse for why piracy should be tolerated and permitted, and once again, you fail miserably."

WTF??? This article was not written to justify piracy. Is that the best you can come up with, really? The article is about giving the copyright industry special treatment in a capitalist market, but you ignore that and go for the FUD. The pirates are destroying America. Whatever.

"The internet creates jobs with or without a SOPA law."

That is actually true, but it leaves out the fact that SOPA/PIPA would be likely to slow the growth of job creation from the internet and do nothing to increase job creation in the copyright industry, but you didn't address that.

"Do you really think that The Pirate Bay is a great source of employment in the US? Do you think that keeping Megaupload online was doing some great favor for the unemployment rates in Nebraska?"

Wrong questions. Try this one. Do you think the Pirate Bay and/or Megaupload have done significant damage to the copyright industry or affected unemployment in Nebraska? The answer is no. Please don't counter with record stores, as the loss of jobs in that niche is more than made up by other jobs created in other places on the internet, and the music industry as a whole has experienced growth.

Why are you so focused on piracy as a business model? The focus of the article is on job creation on the internet. Wake up. The internet is much more than just music and movies, and the opportunities for job creation are far wider than just the copyright industry. The issue at hand is one of creating laws that favor one industry that have an impact on many other sectors.

You can keep shouting at the top of your lungs that PIRACY is BAD, but the fact is that current copyright laws are already being abused to deal with piracy. The public will continue to resist laws like SOPA/PIPA that have a direct impact on the internet and job creation. Hmmmm piracy or job creation, which is more important?

Guess what? Most of America does not live in Hollywood or work in the copyright industry, nor do we care if movies can no longer pay $3 million to an actor for a role. We do care if sharing a video of our children that has a Beatles song playing in the background is suddenly a criminal activity.

As has been pointed out countless times, politicians have very little experience with reality and pesky "facts". Internet-related industries will become dynamic job-creating engines just as soon as they contribute to politicians as much as the copyright industries.

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There is no such thing as a "copyright company". There are, however, companies that rely on copyright and a myriad of other laws for facilitating their commercial activities.

Now, are such companies that rely in part on copyright law being treated specially? I think not. Nothing in copyright law creates liability (or in a extremely limited number of cases may be subject to criminal sanctions) on the part of those who operate within the bounds of the law. Neither SOPA nor PIPA create such liability, and those who say otherwise are not being candid.

There is nothing fundamentally wrong with the concept that those who violate the law should be held accountable for such violations.

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Now, are such companies that rely in part on copyright law being treated specially? I think not. Nothing in copyright law creates liability (or in a extremely limited number of cases may be subject to criminal sanctions) on the part of those who operate within the bounds of the law. Neither SOPA nor PIPA create such liability, and those who say otherwise are not being candid.

No. Those who claim that SOPA and PIPA create no liability are flat out lying. Which is the case here.

The amazing stretch with SOPA and PIPA is -- stunningly -- to put legal liability on third parties who have not broken the law in any way shape or form. Those who pretend this isn't true are flat out lying.

There is nothing fundamentally wrong with the concept that those who violate the law should be held accountable for such violations.

Indeed. And that's what's so ridiculously nefarious about SOPA/PIPA. They say well party A is enabling person B to infringe... so let's put all the liability on American internet company C.

That's insane.

I'm all for saying those who violate the law should be held accountable, but that's not what SOPA/PIPA does.

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I am not sure what you mean when you say "to put legal liability on third parties". For example, are you talking about secondary liability (vicarious, contributory, inducement), are you talking about obligations to comply with court orders lest you be held in contempt of court, something else?

Dubious Figures

My feeling is that the figures quoted by the International Intellectual Property Alliance for the role of copyright in the American economy are about five or ten times too high. A basic sanity check is that the average American does not spend thousands of dollars on identifiable copyright goods.

For example, my own rough and ready estimate is that, in terms of Full-Time-Equivalent, the movie industry might employ about a hundred thousand people, and that many of those are actually engaged in producing television commercials. This is based on a critical reading of membership in the relevant trade unions, allowance for other fields of endeavor, etc. For example, informed estimates take the view that only about 40,000 of the Screen Actors Guild members are "real actors," that the others are people who were allowed, under the regime of Edward Asner (1981-85), and thereafter, to buy SAG memberships for about $2000 each as a kind of fashion accessory, in order to help out the pension fund in the short run.

One might add that those hundred thousand people are geographically concentrated in Southern California. Even within Los Angeles, the movie industry is not all that big. The really big-ticket industries are manufacturing (notably aerospace) and importing (the Port of Los Angeles).

There are a very few congressmen who have to take account of the movie vote, but only a few.

Similarly, if one looks at the newspapers in mid-sized cities, these have surprisingly few _paid_ employees. The same applies for magazines. As one might expect, the overwhelming majority of what American newspapers and magazines produce is of little or no interest to foreigners. I suspect the quoted figures for export earnings are uncritical quotations of the total revenue of global corporations, which have subsidiaries in various different countries, and produce local news for local consumption with local employees.

One of the largest sectors of "copyright employment" is claimed to be software. However, only a small fraction of Microsoft employees actually write code-- the majority turn out to do tech support on special paid support contracts. They provide a service, in short. In any event, most expenditure on software is on custom software, not on package software.

Internet and jobs

So true. At the same time, the big issue is being ignored; with money tied up by the one percent (think: No New Taxes, or Welfare For The Wealthy), we can't afford teachers, or street improvements, or utility improvements, or ....

So, these people have to "reinvent" themselves and compete with others for the rapidly dwindling jobs, and putting downward pressure on wages and benefits (A TAX ON THE MIDDLE CLASS to finance welfare for the wealthy!).

That is the big problem, even though it is only a part of the overall illness in our economy. I submit it is the biggest part.